tracks changes in the cost to the average consumer of buying a "basket" of goods and services;
price changes are detected through surveys of the cost of a defined basket of consumer goods and services that may be fixed or may change at specified intervals.
Laspeyres index is generally used:
Laspeyres formula is a weighted arithmetic average of the current to base period prices,
the basket of goods and services of the base period serves as both the weight reference period and the price reference period;
the formula is therefore also known as a base weighted index.
The price index is generally used to calculate the Inflation rate.
Online calculator: real value of US dollars after adjusting for inflation.
Online calculator: real value of US dollars after adjusting for inflation.
